PSU insurers' market share drops to 73%

Public sector general insurance companies' market share reduced to 73 per cent in financial year 2005-06 despite a robust industry wide premium growth of 16.25 per cent.

General insurance premium collections' growth was powered by more small and medium enterprises taking risk cover as bank/institution financing to the sector increased. The industry added about Rs 2,848 crore during the last financial year in premiums as a result.

According to figures released by the Insurance Regulatory and Development Authority, premium collections in FY-06 were Rs 20,387.61 crore - up from Rs 17,049 crore during the previous year.

The growth, however, was contributed - New India Assurance Company Ltd, Oriental Insurance Company Ltd, ICICI-Lombard General Insurance Company, Bajaj Allianz General Insurance Company Ltd and IFFCO-Tokio General Insurance Company Ltd accouting for Rs 2,587 crore in premiums.

During the period, the public sector insurers' premium collections rose only 7 per cent to Rs 1,4951.74 crore. Premium collection of the private sector, on the other hand, grew 52.54 per cent to Rs 5,426 crore with an improved market share of 26.6 per cent. In FY-05 private sector's market share was only 20.2 per cent.

Among the public insurers that suffered shortfalls in premium collections was National Insurance Company Ltd. NICL's premium collections shrank Rs 276 crore in FY-06 to Rs 3,524 crore. OICL was within striking distance of the number two slot in industry rankings - growing premiums by 16.6 per cent to Rs 3,518.64 crore.

ICICI-Lombard and Bajaj Allianz topped the Rs 1,000-crore premium mark. ICICI Lombard topped the league charts among the private sector companies with a market share of eight per cent, up from five per cent. Premium collection of ICICI grew 80 per cent to Rs 1,592 crore in FY-06 up from the previous years Rs 885.16 crore. Bajaj Allianz's premium collections grew 50.42 per cent to Rs 1,287.67 crore during the period.

Industry sources said that the growth in the insurance industry was also triggered by the strong economic growth. However, despite the estimated strong GDP growth in 2205-06 estimated at close to 7.5 per cent, there was a slight drop in the premium collection buoyancy. For FY-06, the sensitivity increased to about 2.1 per cent. Sources said this change was largely on account of the increased penetration by the insurers and inclusion of more components into risk covers. Corporates, for instance, have begun taking covers against terrorism, earthquake and flood against such risks. Consequently, even with containment of motor risk covers, premium flows remained unaffected in FY-06. Besides during the period more banks have opted to take risk cover against their farm loan exposures. This was to cover against potential crop damage/losses in the event of bad weather on which banks have a charge.

(This article was published in the Business Line print edition dated May 11, 2006)

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